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U.S. Housing: A False Dawn Recovery in 2009?
That doesn't really affect housing prices though, does it?
[pent-up demand from strong household formation should help mop up remaining excess inventory, given the collapse in new construction.]
Sure, but we're going to need a lot of fools to mop up if your prediction of further declines is correct.
[The slump in gas prices will make the hard-hit 'exburbs' with their long commuting distances, particularly in the Southwest, viable again for buyers.]
For how long? Even if they do stay down for the long term (they're already approaching $2 again), consumers are waiting for the next excuse du jour that will drive prices up again.
[it is quite possible we get a short-lived 'bungee jump' move in U.S. housing later in 2009, assuming further aggressive support measures from the incoming Obama administration.]
Using larger spoons to conduct the bailout does not change the fact that we're facing a tsunami.
[Aside from still historically high valuation levels, weak real income growth and rising unemployment, demographic factors become increasingly bearish for supply beyond 2010 as baby boomers begin to downsize their living space in large numbers. ]
There lies the core problem. No amount of "streamlined"... modifications, sweeping legislation, or new "initiatives"... can do anything to change any of those factors.
Personal Responsibility and the Housing Bubble
If you'd like housing prices to deflate another 50%, then requiring a 20% dp would do nicely.
[What happened to taking out a mortgage where the payments were affordable for the duration of the loan?]
Now there's a good question. Pre-2003, you couldn't sell an adjustable rate mortgage with a shotgun in your hand.
[The doctor admitted to not reading any of the loan documents saying she did not have time to do that since she was busy running her medical practice.]
She's really not that unusual. Due diligence is a chore. How many average investors read a prospectus, much less get on any conference call, or check a company's financials before buying a stock? Watching Cramer or reading a blog is what passes for research.
Option ARMs: The Banking Backdrop of 2009
First, these loans were typically made to borrowers who were betting on appreciation. Second, they're often made to borrowers who are self-employed... many of whom are not very good personal money managers. Third, and most pernicious, is that these loans are nearly all 100% LTV, often with "generous" appraisals.
Not only would most of these borrowers need considerable payment relief on the TEASER rate in order to stay, they'll more than likely walk without substantial principal writeoffs... which most lenders are unwilling to offer.
The Great American Ponzi Scheme (Part II)
I agree. Little to no time seems to be spent discovering what kids are good at, where their strengths lie. All the focus seems to be meeting arbitrary competency scores. The trades are where "losers" are shunted (kids who don't get good grades).
Tradespeople are largely devalued. Listen, when my roof leaks, or the furnace dies, it's a damned valuable person who comes out to fix the mess. We could use some brighter people in those industries, people whose skills complement the work that needs to be done... not just the guys who couldn't cut it anywhere else.
Furthermore, I live in a northern client and I am shocked at how completely inefficient home design is. "Energy Star" ratings are a joke, and provide very little, marginal value. The design of homes needs a complete, fundamental overhaul with regards to energy efficiency.
The Housing Blame Game, Redux
Cheer up, Paul: the government is expanding its influence in other areas lately. There will be much more to debate and discuss going forward.
[we didn’t get into a historic mess overnight, or because of any one bad decision or company. It took a collection of actions, and a multitude of players, to create a mess of this magnitude;]
You've taken the fun right out of the debate. We've been conditioned to believe that there is ONE bad guy, one party who's chiefly to blame. We will not be satisfied until that culprit is found and lynched- literally or figuratively.
[the sooner we all recognize this truth, perhaps the sooner we can begin to address real solutions that will make a difference and help prevent us from ending up here again.]
Like most of our problems, we're all to blame, to some degree. But admitting that would force all of us to accept responsibility, and... we'd rather not. Thank you, though.
Also, regarding real solutions.. That's not terribly attractive to anyone involved in the debate. It removes a platform from which politicians can proselytize, pander, and raise money, it limits finger pointing, and it gives everyone one less thing to complain about...
then we'd have to revisit the same old issues we've been talking about and not doing anything about for years. New problems allow us to feel better about ourselves, because we're temporarily distracted from all the old problems we still haven't solved.
Against Lower Mortgage Rates
No... it makes no sense at all.
And yet, this describes the scenario in a LOT of households. And when one spouse loses a job, takes a pay cut, or leaves in a divorce, the whole house of cards comes tumbling down.
As the economy continues to unwind, we'll be seeing a lot more foreclosures, 4.5% rates notwithstanding.
Look out below.
0% Financing Doesn't Mean It's Free
They're already overextended. Are we SURE that we want them to continue to borrow?
[The poll found that nearly two-thirds of Americans support new federal spending to stimulate the economy, and majorities of both Democrats and Republicans back the idea. .... When respondents were asked whether they would back the plan if it increased the deficit, support dropped to 47 percent.]
So, 19 percent of the respondents were mentally handicapped?
Good News for Household Balance Sheets
Apps may be up, but they don't always lead to approvals.
Why Would We Want to Bail Out This Homeowner?
I'd like to look at a few points...
[He already stole the appliances, and now he plans to take advantage of the lenders some more.]
Did he steal them? How do you know? There are plenty of cases where the renters have their own appliances in a SFH situation.
And, what evidence do we have that he didn't try to work things out with his lender?
[Since taxpayers are basically on the hook for many of these lenders, he is also taking advantage of taxpayers.]
Yeah, and so is AIG, and most of Wall Street, and all these other firms that are now posing as bank holding companies.
[If we can figure out a way to limit the bailout to only those homeowners who actually want to stay in their homes and who can afford to do so, I might be more inclined to support it. But any bailout, or other measure, that supports guys like this, will never get my backing.]
Apparently you haven't noticed that most workout activity, as well as most legislation have excluded all but owner-occupied properties.
... which is a possible reason why he's not trying to save the property.
Just as it's been mentioned that there are no atheists in foxholes, or libertarians in financial crises, there are few idealists in foreclosure.
Futhermore, depending on the location of the subject property, he may well be doing the investors a favor. Abandoned properties are a bit of a problem.
The mention that it may be a year before they foreclose has less to do with a moratorium than the fact that the servicers are backlogged, and the investors (judging by their spirit-of-the-season, self-imposed foreclosure delays seem to indicate that they're expecting Uncle Sam to shoulder some of these losses.
After working on the front line of this situation for some time now, I'm fairly critical of most of the players in this scenario. The short-sightedness, the stepping over dollars to save pennies, the sheer size and scale of denial (ALL parties on board)... is astounding.
However, things are much improved when compared to 18 months ago. I'm neither defending nor condemning this man for his actions. It's just that I'm now much less of those acting in their own best interest.
The Future of Residential Mortgages (Maybe)
What I'm wondering is this... if the BK provisions are so unattractive, how are corporations able to borrow money, when their creditors are subject to the same risk?
Would mortgages shift to balloons, with 3-5-7 year terms to mitigate risk and boost fees due to forced refinancing?
Excluding Five Worst States, November 2008 Foreclosures Down by 1.10%
In addition, CA and FL are two of our most populous states.
BTW, I'm not sure who crowned Realtytrac as THE authority on foreclosure data. I've seen some of their info and it was terribly out of date.
Low Rates, Big Problems
And who, exactly, would want to assume a mortgage on an underwater property?
October Housing Affordability Surges to Highest Level Since 2002
...which means that the family earning the median income cannot afford the median home. Is this disparity a good thing? Or are there lots of families shopping around with a 20% down payment (plus closing costs)?
Living on Debt Gives Way to Fiscal Prudence
What if we quit paying what they're demanding?
Higher education continues to charge ever more, and deliver even less with each passing year.
The universities in this country must have learned "customer service" from the airline industry.
There's not another group on the planet that is so clueless on who the customer is.
The contraction in the credit market will prove to be a good thing if it pushes higher ed prices down.
The Cost of Providing a Housing Price Floor
[It is important to note that with an effective guarantee that home prices will stabilize, their collateral value comes back, and credit will start easing significantly.]
I think the Treasury secretary realized the folly of paying more for distressed assets than the market was willing to bear.
You seem to think that real estate acquisition occurs in a vacuum. Not only do you have the price of the house, you have insurance, ongoing tax payments, rehabilitation, losses due to vandalism and accidents.
Everybody seems to have a "grand scheme" that would "cost less than the original bailout."
This problem will not have one big solution, just many small ones.